Core Points - PriceSmart, Inc. will hold its conference call for the third quarter financial results on July 14, 2025, due to a scheduling conflict [1] - The financial results will be released on July 10, 2025, after market close [2] Company Overview - PriceSmart operates U.S.-style membership shopping warehouse clubs in Latin America and the Caribbean, with 55 clubs across 12 countries and one U.S. territory [3] - The company plans to open two new warehouse clubs, one in Quetzaltenango, Guatemala in August 2025 and another in La Romana, Dominican Republic in spring 2026, bringing the total to 57 clubs [3]

Core Insights - Costco's shares have seen a significant increase of 40% in 2024 and an additional 7% in 2025, outperforming the S&P 500's 2% growth, driven by a robust membership model and value-oriented offerings [3][4] - In fiscal Q3 2025, Costco reported revenues of $63.2 billion and an operating profit of $2.5 billion, with $1.2 billion coming from membership fees, highlighting the importance of recurring revenue [3][5] - The company's valuation is high, trading at 55 times earnings and 59 times free cash flow, resulting in a cash flow yield of only 1.7%, which raises concerns about potential volatility [4][9] Business Model Strength - Costco achieved earnings per share of $4.28 in Q3 2025, a 13% year-over-year increase, with comparable-store sales rising by 8% and e-commerce growing nearly 15% [5][6] - Membership renewal rates are strong at 92.7% in the U.S. and Canada, and 90.2% globally, with total household memberships increasing by 6.6% [5] Competitive Positioning - Costco's U.S. same-store sales growth of 8% outperformed Walmart's 4.5% and Target's decline of 3.8%, indicating the effectiveness of its warehouse model for value-oriented consumers [6] - The company operates 905 warehouses globally, leveraging thin margins and its private-label brand, Kirkland Signature, to maintain pricing advantages [7] Supply Chain and Operational Efficiency - Costco's supply chain flexibility allows it to manage tariffs effectively, with two-thirds of merchandise sourced domestically and limited exposure to trade risks [8] - The company is localizing Kirkland production and experiencing steady demand for essential goods, which supports its pricing power [8] Valuation Concerns - Despite solid revenue growth, Costco's expansion has slowed to less than 3% for the fiscal year, raising questions about the sustainability of its high valuation [9] - If comparable sales growth trends towards mid-single digits, investor confidence and Costco's valuation multiple may face pressure [9]

Core Insights - Costco Wholesale Corporation's May sales results indicate strong performance, with implications for stock trajectory [1] - The company's membership-driven model and high renewal rates contribute to reliable revenue streams [2] Sales Performance - For the four weeks ending June 1, 2025, comparable sales in the U.S., Canada, and other international markets grew by 4.1%, 3.3%, and 6.6% respectively, leading to a total company comparable sales increase of 4.3% [3] - Net sales for May rose by 6.8% to $20.97 billion, compared to $19.64 billion in the same period last year, following sales improvements of 7% and 8.6% in April and March [3] Membership Growth - Costco's membership fee income continues to grow, with a high renewal rate of 92.7% in key markets, indicating effective customer retention strategies [4] - The retailer had 79.6 million paid household members at the end of Q3 fiscal 2025, a 6.8% year-over-year increase, while executive memberships grew by 9% to 37.6 million [5] E-commerce and Omnichannel Strategy - E-commerce comparable sales surged by 11.6%, with overall e-commerce comparable sales increasing by 14.8% in Q3 [6] - Costco Logistics deliveries increased by 31%, driven by higher volumes of large and bulky items, and the introduction of a Buy Now Pay Later program enhances purchasing flexibility for members [6] Expansion Plans - Costco opened nine warehouses in Q3, with plans for 10 more in the final quarter, aiming for a total of 27 openings in fiscal 2025, bringing the global warehouse count to 914 [7] Financial Performance and Valuation - Costco's stock has increased by 17.1% over the past year, outperforming the industry average of 8.4% [12] - The forward 12-month price-to-earnings ratio stands at 51.44, significantly higher than the industry average of 32.81 and the S&P 500's ratio of 22.02, indicating a premium valuation [13] Analyst Estimates - Analysts have raised their estimates for the current fiscal year by 8 cents to $18.04, with next fiscal year's estimate increasing by 14 cents to $19.90, suggesting year-over-year growth rates of 12% and 10.3% respectively [10]

Core Insights - Costco Wholesale Corporation reported strong third-quarter fiscal 2025 results, leading to discussions among investors regarding the stock's future direction [2] - The company's strategic initiatives and operational efficiencies have contributed to a positive market response, with shares rising 4.6% post-earnings release [3] Financial Performance - Costco's top and bottom lines exceeded the Zacks Consensus Estimate, with comparable sales growth of 8% excluding gasoline prices and foreign exchange impacts [4] - In the U.S., comparable sales increased by 7.9%, while Canada and Other International markets saw gains of 7.8% and 8.5%, respectively [4] Membership Growth - The company ended the quarter with 79.6 million paid household members, a 6.8% increase year over year, with executive memberships growing by 9% to 37.6 million [5] - Executive members now account for 47.3% of all paid members and drive 73.1% of worldwide sales [5] Analyst Estimates - Analysts have raised their estimates for the current fiscal year by 6 cents to $18.02 and for the next fiscal year by 14 cents to $19.90, indicating expected year-over-year growth rates of 11.9% and 10.4%, respectively [6] Membership Revenue - Membership fee income rose 10.4% year over year to $1,240 million in Q3, with a recent membership fee increase contributing about 4.6% to this income [9] Digital Expansion - E-commerce comparable sales increased by 14.8% in Q3, with Costco Logistics seeing a 31% rise in items delivered [12] - The company is also investing in digital transformation initiatives, including a Buy Now, Pay Later program in partnership with Affirm [12] Competitive Landscape - Costco's sales figures are part of a broader retail environment with increasing competition from companies like Ross Stores, Dollar General, and Target [13] Valuation - Costco stock has outperformed the industry, rallying 26.4% over the past year compared to the industry's 13.8% gain [15] - The stock is trading at a forward 12-month price-to-earnings ratio of 54.42, significantly higher than the industry average of 34.39 and the S&P 500's 21.82 [16]

Financial Results Announcement - PriceSmart, Inc. plans to release financial results for the third quarter of fiscal year 2025 on July 10, 2025, after market close [1] - A conference call to discuss the financial results will be held on July 11, 2025, at 12:00 p.m. Eastern time [1] Expansion Plans - The company has purchased land for its sixth warehouse club in the Dominican Republic, located in La Romana, approximately 73 miles from the nearest club in Santo Domingo [2] - The new club is expected to open in the spring of 2026, bringing the total number of warehouse clubs operated by PriceSmart to 57 [2][3] - Additionally, PriceSmart plans to open another warehouse club in Quetzaltenango, Guatemala, in the summer of 2025 [3] Company Overview - PriceSmart operates U.S.-style membership shopping warehouse clubs in Latin America and the Caribbean, currently managing 55 clubs across 12 countries and one U.S. territory [3] - The countries include ten clubs in Colombia, nine in Costa Rica, seven in Panama, and others in Guatemala, Dominican Republic, Trinidad, El Salvador, Honduras, Nicaragua, Jamaica, Aruba, Barbados, and the U.S. Virgin Islands [3]

Core Insights - Costco Wholesale operates 905 locations, with 624 in the U.S., generating nearly $62 billion in net sales in Q3 2025, averaging around $68 million in quarterly net sales per location, indicating strong performance in physical retail [1][2] - Despite substantial sales, Costco's same-store sales growth was less than 6% in Q3, reflecting the challenges of growth at a larger scale [4] - The company has significant growth potential in its e-commerce segment, with net sales growth of nearly 15% in Q3 and over 16% for the first three quarters of fiscal 2025, outpacing overall business growth [6] E-commerce and Digital Growth - Costco's partnership with Affirm aims to enhance digital transactions through buy now, pay later options, which can drive e-commerce sales [7] - The growth of Costco's digital business is expected to improve profit margins, as the company can track customer purchases effectively through membership accounts [8] - Advertising revenue generated from personalized marketing efforts allows Costco to maintain low prices for its members, reinforcing its low-price leadership strategy [10] Membership and Retention - Costco's membership retention rate was close to 93% in Q3, indicating strong customer loyalty, which is crucial for its business model [12] - Membership growth was only 7% in Q3, but an increase in membership prices led to a more than 10% year-over-year increase in membership income, contributing significantly to overall profits [13] - The company's ability to keep prices low while growing its digital efforts supports its membership-based business model, which is vital for long-term investment success [14]

About this content About Emily Jarvie Emily began her career as a political journalist for Australian Community Media in Hobart, Tasmania. After she relocated to Toronto, Canada, she reported on business, legal, and scientific developments in the emerging psychedelics sector before joining Proactive in 2022. She brings a strong journalism background with her work featured in newspapers, magazines, and digital publications across Australia, Europe, and North America, including The Examiner, The Advocate, ...

Market Overview - Major indexes showed positive performance with the Dow up +108 points (+0.26%), S&P 500 rising +0.40%, Nasdaq increasing +0.39%, and Russell 2000 growing +0.33% [2] - Bond yields decreased, with the 10-year yield at +4.42%, 2-year at +3.94%, and 30-year at +4.92% [2] Real Estate Sector - Pending Home Sales fell -6.3% month over month in April, significantly worse than the expected -1.0% drop, following a +5.5% increase in March [3] - The overall index for Pending Home Sales stood at +71.3, with the West and South regions experiencing the largest declines of -8.9% and -7.7% respectively [3] Company Earnings Reports - Costco reported fiscal Q3 earnings of $4.28 per share, exceeding expectations by $0.05, with revenues of $63.2 billion, an 8% year-over-year increase [4][5] - The Gap's shares fell -17% despite beating earnings estimates with $0.51 per share on revenues of $3.5 billion, as tariffs could cost the company $100-150 million [5] - Dell Technologies reported Q1 earnings of $1.55 per share, missing expectations but showing a +17% year-over-year growth, with Infrastructure Solutions up +12% [6] - Marvell Technology narrowly beat earnings expectations with $0.62 per share and $1.89 billion in revenues, a record high, and raised next-quarter guidance [7] - Ulta Beauty reported earnings of $6.70 per share, surpassing expectations of $5.77, with revenues of $2.85 billion exceeding the $2.80 billion forecast [9]

Financial Data and Key Metrics Changes - Net income for Q3 was $1.9 billion or $4.28 per diluted share, up more than 13% from $1.68 billion or $3.78 per diluted share in the same quarter last year [13] - Net sales for Q3 were $61.96 billion, an increase of 8% from $57.39 billion in the same quarter last year [15] - Membership fee income was $1.24 billion, an increase of $117 million or 10.4% year over year [18] - Gross margin rate increased by 41 basis points to 11.25% compared to 10.84% last year [21] - SG&A rate was higher by 20 basis points at 9.16% compared to 8.96% last year [25] Business Line Data and Key Metrics Changes - Fresh category comparable sales were up high single digits, led by double-digit growth in meat [29] - Non-foods also had comparable sales in the high single digits [29] - E-commerce comparable sales were up 14.8% or 15.7% adjusted for foreign exchange [16] - Gas comps were negative low double digits due to lower average price per gallon [32] Market Data and Key Metrics Changes - U.S. comparable sales were up 6.6% or 7.9% excluding gas deflation [15] - Canada comparable sales were up 2.9% or 7.8% adjusted for gas deflation and foreign exchange [15] - Other international comparable sales were up 3.2% or 8.5% adjusted [15] - Traffic increased by 5.2% worldwide and 5.5% in the U.S. [17] Company Strategy and Development Direction - The company plans to open another 10 warehouses in Q4, bringing the total to 914 worldwide [6] - Focus on maintaining competitive pricing despite macroeconomic challenges [7] - Continued investment in digital and technology to enhance member experience [10] - Strategic sourcing to mitigate tariff impacts and lower costs [9][35] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to navigate challenges posed by tariffs and inflation [12] - The company remains committed to providing quality items at the lowest possible prices [35] - Management noted that in uncertain times, value resonates strongly with members [12] Other Important Information - Capital expenditure in Q3 was approximately $1.13 billion, with an estimated full-year CapEx of over $5 billion [29] - The company ended Q3 with 79.6 million paid household members, up 6.8% year over year [20] Q&A Session Summary Question: What is Costco's current pricing strategy given the market conditions? - Management indicated that they are focused on lowering prices wherever possible and have seen improvements in the competitive landscape [42][43] Question: How has the company managed inventory in light of tariffs? - Management noted proactive measures to pull forward inventory to mitigate tariff impacts and maintain pricing [49] Question: What should be expected regarding growth in non-food categories? - Management acknowledged that while growth is strong, there may be a deceleration as they cycle tougher comparisons from the previous year [60] Question: How is the company addressing member experience in high-volume warehouses? - Management is strategically opening new warehouses to alleviate congestion and improve member experience [63][64] Question: What is the outlook for LIFO charges in the upcoming quarters? - Management provided estimates for LIFO charges based on current inflation rates, indicating a potential increase in Q4 [81][84]

Financial Data and Key Metrics Changes - Net income for Q3 was $1.9 billion or $4.28 per diluted share, up more than 13% from $1.68 billion or $3.78 per diluted share in the same quarter last year [12][13] - Net sales for Q3 were $61.96 billion, an increase of 8% from $57.39 billion in the same quarter last year [14] - Membership fee income was $1.24 billion, an increase of $117 million or 10.4% year over year [17] Business Line Data and Key Metrics Changes - U.S. comparable sales were up 6.6% or 7.9% excluding gas deflation, while Canada comp sales were up 2.9% or 7.8% adjusted for gas deflation and FX [14] - E-commerce comp sales were up 14.8% or 15.7% adjusted for FX [15] - Fresh category comparable sales were up high single digits, led by double-digit growth in meat [28] Market Data and Key Metrics Changes - Traffic or shopping frequency increased 5.2% worldwide and 5.5% in the U.S. [15] - Average transaction or ticket was up 0.4% worldwide and up 1.1% in the U.S. [16] - Gas comps were negative low double digits during the quarter, driven by a lower average price per gallon [32] Company Strategy and Development Direction - The company plans to open another 10 warehouses during Q4, including locations in Sweden, Korea, and Canada, bringing the total warehouse count to 914 worldwide [5] - The focus on digital and technology is seen as crucial for future growth, with investments aimed at improving member experience [9][10] - The company is committed to providing quality items at the lowest possible prices, viewing price increases as a last resort [35] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to navigate challenges posed by tariffs and inflation, emphasizing the importance of maintaining competitive pricing [11][35] - The company noted that in uncertain times, its value proposition resonates strongly with members [11] - Management highlighted the importance of agility in sourcing and pricing strategies to mitigate tariff impacts [35] Other Important Information - Membership renewal rates were 92.7% in the U.S. and Canada, with a worldwide rate of 90.2% [18] - The company ended Q3 with 79.6 million paid household members, up 6.8% year over year [20] - Capital expenditure in Q3 was approximately $1.13 billion, with an estimated full-year CapEx of over $5 billion [28] Q&A Session Summary Question: What is Costco telling merchants regarding pricing strategy? - Management indicated that they are focused on lowering prices wherever possible and have seen improvements in the competitive landscape [41][43] Question: How are price gaps changing in the current inflationary environment? - Management noted that they are closely monitoring pricing and have been proactive in lowering prices as commodity costs decrease [46][48] Question: How should expectations be recalibrated as Costco laps outsized growth from precious metals and gift cards? - Management acknowledged that some deceleration in growth is expected but remains confident in the ability to find quality items at great value [55][61] Question: What is being done to improve member experience in high-volume warehouses? - Management emphasized strategic openings of new warehouses to alleviate congestion and improve member experience [62][65] Question: What is the outlook for LIFO charges in the coming quarters? - Management provided insights into the LIFO charge calculations and indicated that future charges will depend on inflation rates and tariff impacts [76][82]